'Aubrey Discount' May Have Prompted Swift Exit of Chesapeake Chief

In a surprise announcement after the markets closed Tuesday, Chesapeake Energy announced the departure of Aubrey McClendon, the flamboyant entrepreneur who helped found the natural gas and oil company twenty-four years ago.

McClendon, 53, will retire from Chesapeake April 1, according to a company press release, and a search for his successor is now underway. In the release, McClendon said he expected to collaborate with the board during the leadership transition even though he had "certain philosophical differences" with its members.

Chesapeake's board was overhauled last summer amid a shareholder outcry focused on outsized spending and debt levels at the company. McClendon at the time was also weathering revelations that he had borrowed more than $1 billion from a major Chesapeake investor, and faced additional allegations soon after that he attempted to rig the bids for a public land auction in Michigan two years prior. The Justice Department is reportedly investigating those allegations, even as the Securities and Exchange Commission and Internal Revenue Service have been examining other issues at the company.

In light of all the issues, directors became concerned about a so-called "Aubrey discount" in Chesapeake's stock that kept its shares trading at depressed levels, according to two people with knowledge of the company's inner workings. During the course of the past week, said one of these people, they essentially forced him out.

McClendon didn't respond to requests for comment, and a spokesman for the company said press release spoke for itself.

But the initial investor reaction to the Chesapeake announcement seemed to underscore the board's purported concerns. Company shares, which closed the official trading day at $18.97, were up more than 9 percent in after-hours trading.

In an e-mail statement to Chesapeake's roughly 12,000 employees dispatched Tuesday evening, chairman Archie Dunham praised McClendon's contributions to the oil and gas company, calling him a "pioneer" who had made "enormous achievements." He also sought to head off rumors that deeper change was afoot, denying that Chesapeake was for sale and promising that the company's many benefits to employees, including state-of-the-art child care and fitness facilities, would remain intact.

"I'm sure that other false rumors will appear," Dunham wrote, "so when they surface, ask" remaining company executives "if they are true."

In a separate e-mail sent to high-ranking Chesapeake employees around the same time, McClendon noted that at a dinner for vice presidents and other senior management team members held on the company's Oklahoma City campus just last week, his departure had not been under discussion.

Tuesday afternoon's company statement added that the results of an internal investigation into related-party transactions, among other things, would be revealed before the market opened on Feb. 21. To date, the statement added, the board's review had indicated "no improper conduct" on McClendon's part.